WAREHOUSE FIRM.

Auckland Star, Volume LXIII, Issue 262, 4 November 1932, Page 7

WAREHOUSE FIRM.

DECISION TO LIQUIDATE. MACKY, LOGAN, CALDWELL SUBSIDIARIES NOT AFFECTED. STATEMENT TO SHAREHOLDERS. A general meeting of shareholders of Macky, Logan, Caldwell, Ltd., held in the Chamber of Commerce this morning, decided that the company should go into voluntary liquidation. In addressing the shareholders, Mr. T. M. Macky, chairman of directors, said that the confidential memorandum circularised among them covered almost all that could be said, and simply emphasised the reasons given for the discussing of the "extraordinary resolution" to go into liquidation. Mr. Macky said that the trading results of the company during the six months ended July 31 last showed a further considerable loss. The company's overdraft at the bank was considerably in excess of the arranged limit, and, while the bank was prepared to find further advances, subject to conditions, it declined to find interest due to depositors on February 1, 1933, eo that the directors could no longer rely on carrying out the obligations they had entered into by deed with the depositors. The conditions on which the bankers of the company agreed to find money for trading involved, in the opinion of the directors, a liquidation of assets in so short a period that further losses would accrue. Recognising the danger of incurring further losses, the conclusion was arrived at that, owing to the conditions prevailing and the uncertain outlook, together with the accumulated losses and obligations, the company was unable to carry on. Loss of Capital.

The statement of assets and liabilities taken from the audited books at the half-yearly balancing period at July 31 might assist shareholders in coming to a decision. The directors viewed with concern the continued losses which had been incurred, but they were not unmindful of the results of the liquidation of such a large and old-established company. During the pafet half-year a net lose had been sustained of £39,212, which, with the loss carried forward, made a total loss of capital at July 31 of £172,632. After making provision for the payment of £587,557 due to the bank, depositors and sundry creditors, and for accumulated losses amounting to £172,632, there was an apparent surplus of £351,626 available towards satisfaction of the amount due to the shareholders in respect, to share capital. "But it must be remembered," said Mr. Macky, "that this is the book value and taken as a going concern."

No attempt had yet been made to value the business from the shareholders' point of view, because there was no reliable basis on which to build. The stock and book debts were faithfully shown at their respective figures. All the other assets were more or less of a fixed nature and their value depended on the opportunity to sell them. On the liability side the trade liabilities were hot heavy as compared with the volume of trade the company commanded, and the bulk of the liabilities consisted of bank advances and depositors' loans. Included in. the trade liabilities the amount owing in London was taken at £50,000, against which goods were either at the London packers or in transit. 01

Severe Competition. It would be impossible, said Mr. Macky, to detail the difficulties of trading and management which had been v encountered since the slump of 19201921, and more particularly during the six years since 1920. The company had to face a constant lowering of values in the class of goods it dealt in, which had resulted in serious competition, with price-cutting in nearly all lines. The interest £>n the bank advances and the depositors' loans had been a very heavy charge on the business. Constant attention had been given to costs and expenses of the business, but the fall in values had in nearly every case nullified any savings, while award rates of wages, interest, rates, insurances, and other fixed charges had all added to the burden. In August, 1831, the company found it necessary to call a meeting of the depositors to obtain an extension of the due date to 1934. Certain of the depositors had not signed the deed and some of them had threatened action to enforce payment. In looking the directors could see no way of meeting deposits coming due in 1934 and 1936, and at the same time carrying on the trading activities on their present scale. The directors had carefully examined the prospects of ■ the future and there were no indication of an improved position in the next two or three years to warrant incurring further possible losses —withholding depositors' capital, interest, and incurring further debts of t> • company. After thorough consideration the directors recommended the voluntary liquidation of the company. The preference shareholders, and indeed all shareholders, had stood out of their interest and dividends for some years, and no good purpose could be served by I carrying on the present financial structure of the company.

The resolution that the company go into liquidation was then put and carried without dissent. Founded by Aucklanders. The company was brought into existence in the year 1882, and has therefore just completed 50 years of life and service to the community. The founders were well-known Auckland men, Messrs. J. C. Macky, J. F. Logan and D. R. Caldwell. Of these Mr. Caldwell is still living, but has not been directly connected with the management for some years. The buniness had very small beginnings, and grew with the city and country till it provided employment for over 2000 persons. Its chief business was wholesale warehousing, but it had manufacturing interests almost as large. Separate Companies. Sections of the firm's business have been formed into separate limited com- | panies, which have been encouraged to | develop entirely separate businesses. They comprise the Cambridge Clothing Company, Ltd., the Classic Manufacturing Company, Ltd., the Plummer Hat Company, Ltd., all of Auckland; the Manawatu Hosiery Company, Ltd., palmerston North; the South Canterbury Woollen Mills, Ltd., limaru; and the Oamaru Woollen Factory Company Ltd. Oamaru. These are not affected by tile liquidation of the wholesale warehouse company, and will be carrying on M usual. ... ."Mb